For any business owner there comes a time when you need to consider selling your office. It's important to know the legal implications when you do.
Maybe it's because you're retiring and handing the business over to someone new. Maybe it's because your business is growing and needs a bigger home. Regardless of the reason, you still need to know how to protect your legal interests.
An experienced attorney will be able to handle all the details but you still want to know what to look out for in the process. Here are five legal issues to consider:
- Decide whether to sell or lease. There are benefits both to selling the property and to holding onto it to lease to other businesses. Evaluate both the property and rental market in your area before committing to a decision.
- Find a good method for valuation. There's a difference between measurable industry standards for property valuation and back-of-the-napkin calculations for how much you should get. Unfair pricing won't help a sale, so make sure you really know what the listing price should be.
- Keep good records. Selling property is always a stressful time, but it's important that repairs, inspections, and other evaluations are properly recorded. Make a plan for how these procedures will be documented and kept for potential buyers.
- Figure out the tax consequences. There are tax implications, like federal gains tax, that kicks in when you sell property. But if you plan to buy a new office, you can limit your tax liability using the 1031 exchange process. Ask your attorney if that's right for you.
- Know about any defects and disclose them. When selling property, an owner has a duty to disclose any known defects. That includes defects the owner should have been aware of with reasonable inspection. Before meeting with any potential buyers, do a walk-through of your office space to make sure you know about any potential problems.
The legal implications of selling an office can be daunting. But with a good attorney on your side and some knowledge of potential legal pitfalls, you'll be prepared for anything.
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